The Warburgs

by Ron Chernow

  (Courtesy of Anita Warburg)

  In 1909, he wooed a mysterious young man named Dr. Wilhelm Charles Regendanz, who fancied himself a budding German Cecil Rhodes. Bored with bureaucratic drudgery at the Colonial Office, Regendanz manufactured blueprints for German colonies in Africa. Dernburg told Max that this young man yearned for resolute action. Regendanz never thought small. In 1909, he wrote in his diary, “Must study maps to see where I can acquire a colony of my own.”6 Max offered him a job as a “legal adviser” at the bank, which was really window-dressing, for Regendanz would head a special department dedicated to colonial expeditions. The Colonial Office had slipped a trusted operative into a prestigious private bank.

  Regendanz embroiled the bank in perhaps its most outlandish episode, a colonial affair that began as high drama and ended as deadly farce. In 1910, Max founded the Hamburg Morocco Society, with Carl Melchior as its chairman and Regendanz as chief executive. Its stated aim was to promote German mining in Morocco; its unspoken agenda was to challenge French predominance. About the same time, the Mannesmann Brothers created a new subsidiary, Morocco-Mannesmann, to exploit ore in southern Morocco.

  Five years earlier, Wilhelm II had stepped off a HAPAG ship in Tangier and committed German prestige in North Africa, demanding that France follow an open-door policy for other powers. Starting with the 1906 Algeciras conference, France assumed police and budgetary powers in Morocco, while allowing other powers to intervene to safeguard their own interests. For several years, France and Germany warily coexisted. Then, in May 1911, France responded to local disturbances by seizing the Moroccan capital of Fez, which Germany branded a violation of the Algeciras pact. Intent upon teaching the French a lesson, the German Foreign Office decided to stake a strong claim to southern Morocco. It dispatched warships to Agadir, a dusty fishing village on the southern coast that had an old Portuguese castle overlooking a spacious bay. Berlin needed to concoct some pretext for this saber-rattling and preferred a commercial one to mask its political motives.

  Instead of reacting with his typical bluster, the kaiser was actually squeamish about confronting France. When Max visited the Foreign Office on June 16, he received two requests: send Regendanz to southern Morocco and soften up the kaiser. “Should His Majesty the Kaiser inquire about Morocco while in Hamburg, so would it be in accord with the views of this office, if you should expressly underscore the importance of our economic interests in the south of the country,” Baron Langwerth informed him.7

  The alleged German interests in southern Morocco were speculative at best, nonexistent at worst. When Regendanz visited Under-Secretary of State Zimmermann on June 19, he provided him with geological reports of the Hamburg Morocco Society that conjured up rich veins of copper ore. Although an architect of German policy in Morocco, Regendanz hadn’t actually visited the country, which freed his imagination from any factual encumbrance. He evoked not only storied mineral deposits, but a lush, fertile river valley near Agadir that was supposedly perfect for agricultural settlement. If this fecundity later proved apocryphal, it provided the German government with the “vital interests” it needed to send ships to protect. Max was now hip-deep in all the maneuvering. As the Foreign Office said, its policy relied on “very confidential information from Messrs. M. M. Warburg in Hamburg.”8

  There was a shortage of German nationals in southern Morocco to protect: to be more precise, there were none. Regendanz promised that he would land some threatened settlers on the scene by the time the warships arrived. In Hamburg, he drew up a magnificent appeal for help that could be issued by these threatened Germans and used to justify armed intervention. The Foreign Office could then appear to respond to private appeals, which it had secretly prepared in advance. Eleven firms with interests in the area, including the Hamburg Morocco Society, signed the appeal without even seeing its contents. The signatories claimed that their holdings were being assaulted by unruly natives and urgently requested help from Berlin.

  While Regendanz was in Berlin, Max dined with the kaiser on June 19, meeting him again the next day. Unlike Regendanz, the kaiser had visited Morocco and was less than enthralled. His Majesty was too dovish for Regendanz’s tastes, so the misguided young idealist kept the leader in the dark, believing the Agadir maneuver “urgently necessary for raising German prestige in foreign politics.”9 Max didn’t mention Morocco, Regendanz noted triumphantly in his diary. “According to my request, Warburg had carefully avoided talking about Morocco with the Kaiser, who does not yet know.”10 Regendanz didn’t entirely confide in Max either, fearing he lacked the warlike mettle to see the affair through to the bitter end.

  In late June, Chancellor Bethmann Hollweg and Kiderlen of the Foreign Office went to secure Wilhelm’s approval for the impending naval thrust. When they boarded his yacht, the Hohenzollern, cruising on the Lower Elbe, they learned that the kaiser had spoken vociferously against any Moroccan action. Suddenly faint-hearted, Bethmann asked Ballin if Max was on board: They needed a friend of the kaiser to prepare him. Max wasn’t there, Ballin said, but could be summoned. “For the moment not necessary yet,” Bethmann said, asking Ballin to see the kaiser instead.11 When the kaiser reluctantly consented to the naval maneuver, a jubilant Kiderlen radioed from the yacht to Berlin: “Ships approved.”12 No less ecstatic, Regendanz cheered “Hurrah!” in his diary.13

  The Hamburg group sent a mining engineer named Wilberg to Agadir, expressly to be threatened there by natives. Dubbed the “Endangered German” for his one-man impersonation of an entire besieged German colony, he was supposed to arrive in Agadir by July 1, 1911. Alas, it was a long, arduous trek. On the appointed day, Wilberg was still threading his way on horseback along narrow mountain passes. Sticking to its timetable anyway, Germany issued the Morocco letter, contending that Germans in Agadir had come under heavy fire. Berlin told the French they would avenge this indignity by sending a naval presence. When the German gunboat Panther appeared menacingly in Agadir bay, it couldn’t find a bona-fide German to defend, not even the one dispatched for that sole purpose. The gunboat was joined by the battleship Berlin.

  When Wilberg, distraught and exhausted, finally arrived in Agadir, he couldn’t catch the attention of the two anchored ships. Running up and down the beach, he threw up his hands and shouted like a madman. The sailors aboard the Berlin spotted him, but dismissed him as a crazed Moroccan. Only when he finally stopped in despair, arms akimbo, staring forlornly to sea, did a German officer realize that he must be European, since Moroccans didn’t strike that pose. On the evening of July 5th, the Germans sent a boat to collect this precious cargo: the Endangered German.

  The German press reacted with hysteria to the supposed brutality inflicted upon German nationals. On July 21, David Lloyd George, Britain’s chancellor of the exchequer, warned Germany of possible war, inflaming the German jingo press still further. The French withdrew their funds from Germany as war fever grew contagious across Europe. When negotiations ensued between France and Germany, Regendanz sent a guardedly hopeful note to the Foreign Office: “The whole of South-West Morocco is a very rich country.”14 At the same time, he admitted that the ore deposits might be, well, inaccessible. He seemed to be letting the Foreign Office—or perhaps himself—down gently.

  That summer, Max sent Regendanz on a tour to survey the economic potential of southern Morocco. When he finally set foot on Moroccan soil in August, Regendanz didn’t find the flourishing countryside of his dreams, but only a stony, arid desert. “I have doubts whether the settlement of German peasants can seriously be considered,” he wrote.15 No fabled wealth was in sight, just a lawless backwater full of camels and bandits. As he poked around Morocco in early September, the Berlin stock market crashed and banks were hit by runs. By the end of his tour, a chastened Regendanz was advising the Foreign Office against taking steps to win southern Morocco for Germany. He had based his strategy on a mirage. Abruptly, Germany lost interest in this place that aroused such shrill and passionate outrage in early
summer.

  The upshot was that Germany, in exchange for French predominance in Morocco, extracted a slice of the French Congo and extra land in the Cameroons. A disillusioned Albert Ballin confided to Max his relief that the whole “Morocco Comedy” was over.16 Far from being called to account for his costly machinations, Regendanz was decorated by the kaiser. Everybody papered over the embarrassing episode. Henceforth, Regendanz renounced force in securing land and favored a conciliatory attitude toward England. But the damage had been done, and nationalist tensions were already inflamed. Noting that the Agadir crisis had brought Europe close to war, Max regarded the last-minute solution as nothing short of miraculous.17

  It seems fitting that Moritz died right before Agadir, for he wouldn’t have understood such banker dabbling in politics. He thought bankers should stick to business. Conceding such an attitude as proper in Moritz’s day, Max argued that banking had irreparably changed. “Nowadays such a happy isolation of one’s capacity for work—an aloofness from national and community political activity—is hardly possible.…”18

  —

  For the Warburgs, the prewar summers at Kösterberg were a magical, luminous time. As Moritz had hoped, Felix and Paul often returned, bringing growing retinues of nurses, valets, and maids. Later on, these faraway summers would seem slightly unreal in their naïve, sheltered happiness. The Warburgs had reached a ripeness of experience they would never regain. The brothers were all married, had children, and were embarked on upward career paths. The world wasn’t yet rent by strife that would make life difficult for an international banking family that relied upon tolerance and easy intercourse among nations.

  It seemed that the German Jews might at last achieve full integration into society. They found it hard to separate their happiness from the prosperity and martial glow of the Empire. One summer, the children were whisked off to watch a medal-bedecked kaiser review cavalry troops in his parade dress. Another time, Max got Felix invited to the test run of the Imperator, with the emperor himself on board for the gala event. The twenty-one German and American grandchildren of Charlotte and Moritz Warburg grew up surrounded by Imperial paraphernalia, and would remember the swords and funny spiked helmets of the Hamburg police.

  From the Kösterberg bluff, the Warburgs enjoyed a ringside seat to the spectacular pageant of German naval power. Below on the Elbe, ships glided soundlessly by. The children were taught to identify the flags and markings of the vessels and they even knew the shipping lines from their distinctive foghorns. These passing ships connected them to a larger world. As Paul’s son Jimmy wrote, “From our house, high on the hills overlooking the Elbe, I could watch an endless procession of ships of many nations going to or coming from almost every part of the world.… At the approach of the big Hamburg-American liners I would run up to the attic to dip the American flag, hoping for and sometimes getting a whistle-blast salute in reply from one of the captains who knew the family as frequent passengers.”19 The world’s biggest vessels slid down the Hamburg slipways, capped by the 54,000-ton Vaterland in 1913, apostrophized as the largest moving object ever created by mankind.

  Whether German or American, the large brood of grandchildren was stamped with a common identity. For sports, they all donned the same big blue linen shirts with white collars. The Aby S. daughters even had special clothing made up for Kösterberg visits: white batiste dresses with French lace collars. The cousins rode, swam, played tennis, or went hiking along the cool, tree-shaded footpaths. During the long summer evenings, Max taught the children to ride the ponies given by Albert Ballin. Kösterberg featured a crowded social calendar, with every occasion celebrated by poetry or amateur theatricals directed by professional theater directors retained by the Warburgs. The children would remember these busy summers as both sweetly poignant and terribly regimented. Like adorable puppets, they were posed for photographs in costumed tableaux vivants designed for the adults’ pleasure.

  Moritz had bought Kösterberg for its quiet, rustic charm. Soon after he died, Max built an imposing Renaissance villa in 1912, a red-brick mansion of surprising formality for a bucolic setting. It was designed by the French architect who did the Imperator’s dining room. Max needed a place to hold court. He not only mingled with Christian high society, but had inherited his father’s leadership of the Talmud Torah school and the Jewish Orphanage. The curved back rooms of his villa had a panoramic Elbe view. Max and Alice could entertain up to forty-eight people for dinner. Each summer they recruited a chef and two under-cooks from a fine Berlin restaurant, often dining al fresco on the flagstone terrace. Alice would assemble floral displays in gigantic vases while an orchestra provided after-dinner dancing by moonlight.

  Like Felix at Woodlands, Max converted Kösterberg into a self-sustaining farm, which grew vegetables and provided fresh milk for the children. He laughed that each liter of milk cost him about as much as a bottle of Mumm champagne.20 No aspect of Kösterberg life gave him such pleasure as landscaping. He hired a landscape architect named Else Hoffa. She was one of Germany’s first female gardeners and had trained at Sans Souci, the palace built by Frederick the Great near Potsdam. Max agreed to pay her a 10 percent “annoyance premium” if she never bothered him with worries.21 She hired seventeen gardeners to tend lawns, flower beds, and greenhouses. Early each morning, Max would inspect the gardens with Fraulein Hoffa and one child. Down by the river, she created a series of terraces with a rose garden leading down to a natural amphitheater and a Roman Garden with tall topiary shrubs that framed river views. Surrounded by English box trees, the sunken theater had grassy bleachers with room for two hundred guests to watch family theatricals. After night performances, the audience would dance in the Roman Garden and then each couple would carry burning torches up along the parkland paths and return for more dancing on the terrace of the main house. Only for Charlotte was Kösterberg sometimes sad. Olga’s suicide and Moritz’s death filled the estate with ghosts for her. But she had her own, long-anticipated pleasure: Ever since girlhood she had wanted to see Rome. Now in her early seventies, she began taking daily Italian lessons and, in December 1913, took Felix’s daughter, Carola, to Rome.

  About the same time that Max built his aristocratic villa at Kösterberg, he tore down the old bank building on the Ferdinandstrasse, which dated from 1836. For several years he had been buying adjoining properties. On one side stood a fish store that on hot days broadcast dreadful smells, forcing the brokerage department to keep its windows shut in summer. Max tried every ruse to expel this fishmonger. “We went so far as to instigate one of our employees to marry the rather elderly proprietor of the fish shop, but despite working on both victims the marriage did not take place.”22 In 1906, Max got the property.

  Begun in 1911, the new M. M. Warburg building was finished and occupied two years later. A grand neoclassical building, it resembled the Speyer Building on Pine Street in New York, itself modeled after the Florentine palazzo of Pandolfini. It made no real concession to Hanseatic taste. With its rusticated base, pediment-topped windows, and rooftop balusters, it resembled the impregnable financial fortresses of Wall Street and the City of London. A block from the Inner Alster, its front corner offices enjoyed lake views.

  The new building reflected both Max’s eminence and his confidence. Although the bank had 111 employees, the new building could house three times as many. The interior shone with polished mahogany doors and wainscoting, and the long, narrow corridors were decorated with glass-encased model ships. Everything about the building radiated a glow of success. Indeed, the Warburg partners—Max, Fritz, Aby S., and Paul in New York—now sat on nineteen corporate boards. Fritz described the period from 1900 to 1914 as the “happiest and most harmonious” in the bank’s history.23 For a large old Jewish family, it seemed almost too good to be true. As it turned out, perfection had been achieved right on the brink of war, chaos, hyperinflation, and new nationalistic trends in German life that would blight the Warburg paradise.

  As a cosmo
politan banker engaged in international finance, Max Warburg feared the mounting xenophobia gripping Europe. Like most Hamburg businessmen, he wished to preserve close commercial relations with England. His annual reports from the early 1900s show a fatalistic disbelief in the surface calm. Max and Ballin hoped England and Germany would settle their differences and form an alliance, yet the jockeying for colonies and the naval arms race dangerously sharpened friction between them.

  Max and Ballin were in a paradoxical position. Vocal supporters of peaceful relations with England, they also embodied Germany’s global ambitions. Max saw that German expansionism heightened tensions, but he also believed that the Fatherland merited a new dispensation in world affairs. And Ballin was an ardent friend of England, but was painfully aware that his own commercial success was a major irritant in Anglo-German relations. When Britain’s Cunard line launched the Lusitania and the Mauretania, Ballin retaliated with the prodigious Imperator and the Vaterland. Once, reflecting upon his anglophile reputation, he said, “I am the only German who may justly claim that he lived in a thirty years’ war with England for the hegemony in the field of commercial shipping. During this time, if I may use a bold comparison, I have taken from the British one trench after another and I have attacked again and again, as soon as I could find the means for it.”24

  Max hoped to reconcile the roles of fervent patriot nationalist and enlightened internationalist—a very Warburgian dilemma. In 1907, he created a sensation by delivering a Bank Day speech about Germany’s lack of financial preparedness for war. With the Reichstag vice-president sitting beside a beaming Moritz, Max noted that the Reich gold reserves in the Julius tower at Spandau would be depleted within the first weeks of war. Yet Max was no warmonger, and in 1908 an episode occurred that filled him with foreboding. In a strident Daily Telegraph interview, the kaiser said the German people were generally anti-British and that Germany needed a large fleet to regulate Far Eastern problems. Max and Ballin were so dismayed by this imperial-scale blunder that they lobbied Friedrich Naumann, a Reichstag reform leader, for curbs on the kaiser’s power.